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December 2016

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Bangladesh textiles and garment sector has had a very successful run past several years boosting its economy. But today, domestic labour unrest is seriously ballooning in to a major crisis that may stunt the garment industry's progress. It is feared that the country may lose its hard earned reputation and position as a major sourcing destination for foreign apparel and textiles buyers.

Several factors have been attributed to its apparent success mainly on account the country's 'competitiveness' due to abundantly available low cost labour and faster deliveries.

However, global crisis - the sub-prime cooling of the US and European markets and of course, the current domestic labour unrest for higher wages will seriously challenge Bangladesh garment industry's 'competitiveness' and skewer its successful run.

Under this scenario, Dr. Sanchita Banerjee Saxena, Associate Director, Center for South Asia Studies, University of California and Berkeley Véronique Salze-Lozac'h, Regional Director for Economic Programs, The Asia Foundation have recently published a study on Bangladesh titled: Competitiveness in the Garment and Textiles Industry: Creating a supportive environment.

The study explores the idea of 'competitiveness' in the Bangladesh garment sector to understand the definition of competitiveness; industry perceptions about competitiveness; factors important to productivity and specific improvements to be made to maintain Bangladesh's share in the international garment and textiles market.

Dr Saxena was on hand to reply to our queries through email as follows:

Fibre2fashion: What is the current state of Bangladesh Apparel industry?

Dr Saxena: Since the MFA phase out, contrary to much of the negative speculation, Bangladesh has performed extremely well in the garments industry post-2005, as evidenced by increased exports to the U.S. and the EU. Currently, there has been a small dip due to overall economic conditions and some of the recent labor agitations, but the industry is certainly doing very well overall. Garment industry leaders in Bangladesh are confident that the country is poised to be the number two sourcing destination, right after China.

Fibre2fashion: Please elucidate the competitive advantage Bangladesh has over other Asian neighbours?

Dr Saxena: Initially, it appears that low cost is Bangladesh's key advantage. However, going forward, low costs simply won't be enough. First, buyers themselves are looking for more than low costs. For example, many buyers requested that the Bangladeshi government raise the minimum wage of workers and they played a positive role in the recent wage hike. Second, many analysts point out that in this competitive global market, countries must have other appealing factors besides low cost; factors like quick time to market, innovation, and full package production. Finally, a country like Vietnam thathas higher wages on average is one of Bangladesh's key competitors, so clearly low cost is not the only important factor.